## Acta Univ. Agric. Silvic. Mendelianae Brun. 2009, 57, 13-20

## Modelling of cost-functions under risk and uncertainty

In economics, a cost curve is a graph of the costs of production as a function of total quantity produced. In a free market economy, these curves are used by the entities to find the optimal point of production, where they make the highest profits. There exist several different types of cost curves, while each of them is relevant to a different area of economics. In the article, authors are focused on solution of cost-functions modelling, both short-run cost function and long-run cost function under circumstances of risk and uncertainty. Considerations about factors of risk and uncertainty are based on an irrefutable fact that companies are not separate entities taken out of surrounding environment; entities operate in global world where many random factors are influencing the processes in companies while the number of these random factors is ad infinitum. The fact that estimation of cost functions' parameters are realized from past data is the basis of the considerations about planning of future scope of production based on these functions. Especially for the long-run cost functions it is impossible to leave out all the random influences. Their quantification is derived from aposteriori probabilistic approach according to Bayesian Theorem.

### Keywords

Bayesian theorem, cost function, modelling of costs, probability, risk, uncertainty.